First Chicago Says It`s Recovered Money

Last Of Embezzled Funds Returned

First National Bank of Chicago says it has recovered the last portion of the nearly $70 million embezzled from the bank in a fund transfer scheme.

The remaining funds, totaling $19.8 million, were returned by Chase Manhattan Bank along with $37,046 in interest payments, Chase said Tuesday.

The money was transferred electronically by the alleged embezzlers on May 13 from First National to accounts of an Austrian bank, called Focobank, at Chase in New York. As part of the scheme, an additional $49 million allegedly was wired to accounts of another Austrian bank, Creditanstalt, at Citibank in New York.

Seven men, including two employees of First National, were charged last Wednesday in the embezzlement attempt. Government prosecutors said

Creditanstalt, through Citibank, previously returned the $49 million.

First National filed suit last Tuesday against Chase and Focobank, charging that they had improperly refused to return the $19.8 million. A federal judge in New York ordered Chase to place the funds in escrow.

A Chase spokesman said Vienna-based Focobank didn`t receive documents from First National showing evidence of the alleged fraud until after the close of business on Friday. Monday was a banking holiday in Austria.

Tuesday ``was the first day they could really focus on the underlying facts,`` the Chase spokesman said. Chase had said it was waiting to return the funds until claims to the money were ``sorted out.``

A hearing on First National`s suit was scheduled for Thursday.

A spokeswoman said the bank now plans to ask that the suit be dismissed.

First National had said that it expected no losses to the bank or its customers because of the attempted embezzlement. However, federal prosecutors had claimed they were still unsure of the disposition of the $19.8 million. They asserted that Focobank might have disbursed some of the money in anticipation of receiving funds wired from Chase.

Because of that argument, federal magistrate Bernard Weisberg on Friday ordered two of those charged in the case, Armand D. Moore and Neal Jackson, held without bond.

Prosecutors had said they would notify the court when they found out anything concrete about the disposition of the funds. The matter was expected to be addressed at a hearing before Weisberg Wednesday.